Tuesday Morning Eye-Opener: Growth Through Social Media

A couple of interesting stories over the weekend that pointed to the power of social media...

CNBC reported on how New Belgium Brewing, the nation’s third-ranked craft beer manufacturer, has evaluated the importance of social media in its business.

According to the story, New Belgium spent $235,000 on its social media presence last year, including its Facebook page. The company recently surveyed its Facebook followers and found that, on average, each one spent $260 a year on the company’s products. That adds up to more than $50 million a year in sales, or roughly half the company’s annual sales.

And USA Today reported on Smashburger, the rapidly growing burger chain that “offers coupons and trivia contests for its 67,000 Facebook followers, replies to questions and complaints on its Twitter and Facebook profiles, and actively reaches out to bloggers who might write about the new Smashburger restaurants opening in their areas.”

"The brand was really built on social media and PR strategies," Jeremy Morgan, Smashburger’s senior vice president of marketing and consumer insights, tells USA Today. "Social media is an opportunity for us to engage with consumers and have a conversation, which is different than paid media, when you're just shouting through a bullhorn."

BTW...think about these stories in the context of the piece that Michael Sansolo wrote last week about the Sugar Mountain Bake Shoppe.

Mobile Commerce, On The Move

Internet Retailerreports that more than two out of three - 68 percent - of leading e-tailers have developed smartphone applications, and 59 percent of them have built mobile commerce websites.

In addition, the story says, a new study shows that “around one-third of retailers have optimized their sites for browsing and buying on tablets.”

However, Internet Retailer suggests, “m-commerce sites typically have very little dynamic content and focus mainly on search and category navigation, and that while most mobile sites allow ease of small-screen purchasing, this often comes at the expense of a more engaging overall shopping experience.”

KC's View:
It seems clear that this is something that is going to have to change, that mobile connectivity is going to drive more retailers to create “dynamic content” appropriate for that environment. I know that I find myself using my iPad more and more, and take it with me almost everywhere I go. It’s gone from “nice to have” to “need to have,” and I expect that the sites I use increasingly will be optimized for iPad usage.

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Study: Customer Satisfaction Up, But Tepid Rates Raise Concerns

The American Customer Satisfaction Index (ACSI), from the University of Michigan’s Ross School of Business, is out this morning with its evaluation of products and services available to household consumers in the United States. Some excerpts:

• “As the economy improves, albeit at a very slow pace, aggregate customer satisfaction with goods and services has improved as well. The ACSI gain for the final quarter of 2011 is very small, but it represents the fourth consecutive quarter without a decline. The national ACSI advances by 0.1% to an overall score of 75.8. In total, the ACSI national average gained 0.7% in 2011.”

• “The good news is that customer satisfaction continues to climb, which has a positive effect on consumer demand and economic growth. The bad news is that the customer satisfaction improvement is tepid. This is particularly noteworthy because a good part of the higher customer satisfaction in Q4 comes from lower gas prices. Gas prices have since reversed course and are now rising, which means that customers obviously are going to be less pleased.”

• “Customer satisfaction with supermarkets improves by 1.3% to an ACSI score of 76, despite a continued rise in food prices. In 2011, the cost of food prepared at home rose 6.0%, following a 1.7% increase in 2010. Even though this is a price-sensitive market, the negative effect on customer satisfaction from higher prices was dampened by changes in stores (remodeling and freshening up) and by expansion of merchandise selections—all designed to improve the shopping experience for consumers, including making it easier to compare prices.”

• “As always, Publix Super Markets reigns supreme in customer satisfaction among grocers—as it has each year since 1994. Publix holds steady with an excellent ACSI score of 84. Meanwhile, Wal-Mart’s supermarket business is at the bottom of the category, down 3% to 69—a score that is well below the next-closest chain, Supervalu at 74 (unchanged). In an industry where most competitors try to leverage quality, in one form or another, as a means to compensate for price increases, Wal-Mart’s concentration on price alone does not seem to help satisfy customers. Many consumers may be patronizing Wal-Mart because their economic situation dictates it, not because they have a strong preference for it.

“Whole Foods Market places second behind Publix, inching up yet again with a 1% gain to 80. Customer satisfaction for Whole Foods has trended upward in every year since 2007—its first year of measurement in the Index. Whole Foods is one of many examples of the payoff from satisfied customers. Its large gain in ACSI (10%) over the past four years is nearly twice that of any other chain and its stock price is up more than 600% over the past three years.”

• “Retailers that specialize in particular merchandise, such as home improvement, electronics, office supplies, or books, also do a better job of satisfying customers. The category is up 1.3% to an ACSI score of 79 and 2011 marks the fourth straight year of customer satisfaction improvement. Membership warehouse clubs lead the way, with Costco on top, up 1% to 83, followed by Wal-Mart’s Sam’s Club brand, which gains 4% to 81. Barnes & Noble drops out of the lead, falling 4% to 79. Now alone among the big bookstore chains after Borders folded last year, Barnes & Noble is trying to stave off bankruptcy as the book industry continues to evolve in the digital age. The retailer faces tough competition from Amazon.com (and its much higher level of customer satisfaction—an ACSI score of 86). Amazon’s online model for selling books and music is more cost-efficient and its Kindle e-reader is a formidable competitor to Barnes & Noble’s Nook e-reader.”

• “After a drop a year ago, customer satisfaction growth with online retail is back up with a 1.3% gain to an ACSI score of 81. This is not quite the satisfaction level reached two years ago, but is still very high. In fact, Internet retail is the highest ACSI-scoring retail category, well above most traditional stores. Both Nordstrom and Costco, however, outperform the online retail average and do better in ACSI than all but the very best Internet retailers. In the latter group, Amazon leads at 86, despite a slight 1% falloff, followed closely by Newegg, which gains 1% to 85. Overstock is next at an unchanged score of 83. Matching the industry average, eBay is steady at 81. The aggregate of all other online retailers, including the websites of the brick-and-mortar chains such as Target and Wal-Mart, gains 3% to 80.”

KC's View:
I can’t help but feel that this is a house of cards, and that things like increased fuel prices are going to cast a pall on the economy, and that as a result consumer satisfaction and confidence are going to take a hit.

The Weather Outside Not So Frightful, Hurting Sales Of Traditional Winter Categories

Advertising Age reports on how the warmer-than-usual winter has had an impact on a lot of companies’ sales, including those that sold outerwear, cold and flu remedies, snow shovels, hot cereal and portable heaters. Even The Weather Channel saw its ratings decline, as people were less concerned about blizzards and cold fronts affecting their lives and work.

“But there have been some warm-weather winners,” Ad Age writes. “Consumers haven't been stuck at home and have been more likely to frequent malls, movie theaters, bars and restaurants ... Outdoor activities from painting and gardening to hiking and running have also been popular, thanks to the unseasonable winter.”

KC's View:
I like the quote from Campbell Soup CEO Denise Morrison in this story...

"We're absolute advocates of global cooling," joked CEO Denise Morrison. "We acknowledge the fact that the weather was warmer. But we also sell a lot of soup in warm weather climates. So we've got to deal with that. And we are. I think where we're going, particularly with our soup business, is we want to increase usage of the product in some ‘positive need states,’ not necessarily the negative ones, like when people are sick or when they're cold. So we're not going to use weather as an excuse."

Especially at a time when climate change seems to be a fact of life - regardless of why it may be occurring - it strikes me as eminently sensible to focus on “positive need states.”

Industry Drumbeat

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For The Moment, Rare: The World’s First Test-Tube Hamburger

The Financial Times reports that “the world’s first test-tube hamburger, created in a Dutch laboratory by growing muscle fibres from bovine stem cells, will be ready to grill in October, scientists believe.”

And, the Times writes, “Researchers believe that meat grown in factories, rather than on farms, will be a more sustainable and less environmentally harmful source of food. Live cattle and pigs are only 15 per cent efficient at converting vegetable proteins to meat from the grass and cereals they eat.”

KC's View:
I’d try it. But they damn well better label it if they start selling it.

The MNB Walmart Watch

• The Boston Globe reports that Walmart has plans to open its first Connecticut grocery store, a 50,000 square foot Neighborhood market store in West Hartford, Connecticut.

• The Wall Street Journal reports that Walmart plans to increase its stake in Chinese e-commerce company Yihaodian from 18 percent to 51 percent. Terms of the deal were not disclosed.

"We are very impressed with Yihaodian's strong management team, solid competence in supply chain management and, like Wal-Mart, they are committed to outstanding service to their customers," Neil Ashe, president and chief executive of Wal-Mart's global e-commerce division, said in a statement.

KC's View:
The Chinese investment probably isn;t just about China, but also about learning and developing skills that can be applied in other places...like the US.

Corporate Drumbeat

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McDonald’s Struggles With Brand Perception Issues

Advertising Age reports on how, despite the fact that McDonald’s has been seeing steady sales and profits increases, the company continues to deal with brand perception issues that are not “keeping pace with sales. According to people close to the company, its internal tracking system finds that McDonald's consistently ranks near the bottom in quality perception when compared with rivals.

“The company is working to close the gap, these people said, by addressing issues related to perceptions about its food's quality, sourcing and nutritional value; sustainability practices, including suppliers' treatment of animals; service; and condition of stores.”

Heather Oldani, McDonald's director-U.S. communications, says that "there is an opportunity for us to answer some of the questions that customers may have, that influencers may have, about our menu, our commitments to the community and in the areas of sustainability -- things that frankly we haven't been as vocal about ... in the past.”

KC's View:
The message here is that brand perception is a lot more complicated than it used to be ... that it isn’t just about the product, but about all the context that permeates how the product is made. Which, in my view, is exactly how it should be.

FastNewsBeat

• Walmart said this morning that its fourth quarter sales were $122.3 billion, up 5.8 percent from a year ago, with US same-store sales up 1.5 percent for the quarter. Consolidated net sales for the full fiscal year were $443.9 billion, an increase of 5.9 percent.

The company seems to have turned around its string of consecutive quarters with stagnant US same-store sales. But legitimate questions still remain about its long-term strategic direction, especially as, on one end, it tries to ramp up its online business to compete with Amazon.com, which it sees as the ultimate enemy, and on the other end, it fights off the dollar stores that have been eroding its low price image.

• The Dayton Daily News reports that Kroger “plans to build a 99,000-square-foot store with a fueling station at Austin Landing, the mixed-use development east of the new Interstate 75 interchange along the Warren-Montgomery county border ... The Austin Landing store would also be less than two miles north of the newest Dorothy Lane Market, on Main Street (Ohio 741) in Springboro.

I love this part of the story...

“‘A new store so near one of our stores will take some of our business, but that’s the nature of the grocery industry,’ said Norman Mayne, owner of the three-store DLM chain. ‘You just cut the pie into smaller pieces, and you have to deal with the new reality.’

“Dorothy Lane Market’s other stores in Oakwood and Washington Twp. have faced new competition from several fronts through the years, from Kroger, Meijer, Trader Joe’s and Earth Fare. ‘We’re still here,’ Mayne said.”

The thing about Dorothy Lane Markets is this ... the pie pieces may get smaller, but if you are really interested in the best tasting pie in the market, you almost certainly go to Dorothy Lane Markets. Which is why, as Norman Maybe says, they’re still there.

• The Boston Globe reports that discount chain Aldi plans to open its first New Hampshire store on March 1 - a 10,000 square foot unit. The story notes that as of now, “the chain has roughly 1,200 stores in 32 states, including six in Massachusetts.”

• The Sydney Morning Herald reports that Costco has committed the equivalent of $150 million (US) “ to step up its burgeoning operations in Australia, earmarking the fresh capital injection for the rollout of three more warehouse-style stores and placing further competitive pressure on Coles and Woolworths.” According to the story, Costco “is believed to have a second site in Sydney it is keen to acquire and build on, and is eyeing a maiden push into Queensland in the next 18 months.”

• In Minnesota, the Star Tribune reports that “cattle futures have reached record highs 10 times so far this year as rising demand for U.S. beef tightens supply and increases costs for restaurants, including Chipotle Mexican Grill Inc. Feeder cattle also reached a record.

“The U.S. cattle herd as of Jan. 1 was the smallest for that date since 1952, and beef exports surged 21 percent in 2011. The U.S. Department of Agriculture forecast a 4.1 percent drop in beef output this year, boosting the cost of the meat for consumers by as much as 5 percent this year, more than any other food group except seafood.”

• Reuters reports that CVS Caremark “said it received requests for information about a prescription drug discount program it runs for uninsured or under-insured individuals from both the U.S. government and the Texas Attorney General.” The company said “the request was connected to an investigation of possible false or otherwise improper claims for payment involving Health & Human Services programs.”

CVS said it would comply with the requests.

• Gannett News Service reports that Taco Bell’s newest innovation will come in the color orange - it plans “a line of Doritos Locos Tacos with shells made entirely from Doritos,” described as “Taco Bell on the inside and Doritos on the outside.”

Industry Drumbeat

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Industry Drumbeat

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Your Views: Food For Thought

Lots of reaction to last week’s story - and my commentary - about “how a preschooler at a North Carolina school was forced to eat three chicken nuggets when a state employee said that the lunch prepared for her at home by her mother did not meet federal nutrition guidelines.”

According to the Carolina Journal story, “The girl's turkey and cheese sandwich, banana, potato chips, and apple juice did not meet U.S. Department of Agriculture guidelines, according to the interpretation of the agent who was inspecting all lunch boxes in her More at Four classroom that day.

“The Division of Child Development and Early Education at the Department of Health and Human Services requires all lunches served in pre-kindergarten programs - including in-home day care centers - to meet USDA guidelines. That means lunches must consist of one serving of meat, one serving of milk, one serving of grain, and two servings of fruit or vegetables, even if the lunches are brought from home.

“When home-packed lunches do not include all of the required items, child care providers must supplement them with the missing ones.” And, the story notes, parents are then required to pay for the supplemental items.

And here’s the kicker. The kid, being a kid, only ate the nuggets, and brought the rest of her lunch home untouched.

I wrote:

The move by the federal employee was profoundly stupid. First of all, that sounds like a pretty good packed lunch by almost any standard. The rules were put into place to protect kids with moronic parents who pack them a soda and a Twinkie for lunch.

But I do think that people who are turning this into a political issue are over-stepping a little bit. Bureaucratic behavior can run amok at any time, but that doesn’t mean that you decide that all nutrition programs in public education are being put into place by food Nazis. Which is what some people would have us believe, because any gasoline that can be thrown on a political fire is seen as a good thing.

A stupid person did a stupid thing. They should be instructed about the spirit of nutrition rules, and told to use their common sense.

One MNB user wrote:

You don't seem to have read the story about the kid in North Carolina forced to eat chicken nuggets carefully enough. You say that the federal employee acted very stupidly. The story says the employee was a state employee.

Nor did you appear to catch the stupidest part of the story: the state requirement that all lunches include one serving of meat ... has no one in North Carolina ever heard of vegetarianism?

Some of the stories I saw said the employee was federal. But I don’t think that’s such a big deal.

As for your vegetarian point - you’re right.

MNB user Bill Welch wrote:

Kevin, at times you astound me. Please describe the parameters under which it is ok with you that the government tells us or our children what to eat. Next month do they tell us what to think or say? OMG they already do that, my mistake.

Give me a break. The government doesn’t tell you what to think or say.

As for what our kids eat ... I think that if the government is helping to fund school lunch programs, then it has a perfect right - and responsibility - to require that the food be tasty and nutritious, rather than the slop that many schools traditionally have served. That strikes me as an intelligent and responsible use of my tax dollars.

Another MNB user wrote:

Here's what you DIDN'T SAY in your commentary: "Under no circumstances will it ever be acceptable for a local, state, or federal "official" to confiscate a child's lunch brought from home and/or dictate what a child is required to eat when bringing his or her lunch from home." [The only possible exceptions: obvious safety risks, alcohol, drugs, etc.].

Why not? You fluffed it off as a stupid mistake by the official and referred to the "nutrition rules," but what's your take on government having license to determine what a parent includes in their child's lunch?

While I understand (sort of) government weighing in on what gets served at schools -- within reason -- the idea that some government stooge should be able to tell my wife what she can feed my kids is an absolute non-starter. To say "Yes" to such a gross over-reach is to say the government has the right to determine what you feed your kids for breakfast and dinner and what you feed them on weekends. COME ON, MAN!

From another MNB user:

What made me crazy was not the story (as you suggested it would), it was your response. You think this is simply a matter of "A stupid person did a stupid thing"? You seem to be blind to the problems caused by the intrusion of government into our lives. Have you disregarded the Tea Party movement entirely? It doesn't occur to you why many would find this objectionable?

Parents should be allowed to feed their kids as they see fit without a bureaucrat making an evaluation.

I'd suggest you re-read 1984. We are about to get the biggest dose of Big Brother in American history when Obamacare's United States Preventative Services Task Force starts making decisions about what's covered by health insurance and what's not. I guess you think the complaints of the Catholic church are just about a stupid person doing a stupid thing.

I'd like to make my own decisions and have the bureaucrats butt out.

MNB user Lonn Whitmill wrote:

I disagree about this not being a political issue. I will shortly turn 60 and have seen profound changes in the way that government impacts out lives. What light bulb I can use to what my grandkids can be served at school (notice that I said what they are served rather than what they would eat). What is wrong with teaching people correct principles and then letting them decide what to do with that knowledge. A free society has an obligation to all members of that society and there must be laws, at a macro level, relative to the whole. But whether my grandchild carries carrots to school in her lunch is not one of them. The bigger the bureaucratic machine the more bureaucrats making stupid decisions. Bureaucrats are another cog in the giant wheel of government and that is, to me, political.

But another MNB user chimed in:

I’ve written before that If the government is providing children lunch (Public School), then it is certainly within their right to regulate healthy choices. In fact, the notion that such regulations are a nanny state serve to discredit those who oppose them because they must oppose any regulation regardless of merit. What could possibly be wrong with the government serving healthy lunch at a government facility? Nothing. The catch all in my mind has always been that students are always free to bring whatever they want from home. The regulation applies to what is served by the school and not the parent. Perfect compromise.

That is why the North Carolina story troubled me.

When I get an e-mail from a certain co-worker that starts with “you won’t believe this,” I generally check the urban myth site snopes.com to find that there is a reason I wouldn’t and shouldn’t believe. In this case, I was curious what regulation was being violated in the lunch from home so I turned to Google which lead me to a follow up in the Washington Post. In fact, it was teacher error. Kids can bring what they want from home, teachers are only encouraged to supplement lunches that need it and in this case the child should have been offered milk.

Teacher error. Not a nanny state.

This was certainly my impression about the regulations - that they applied to lunches served, not lunches brought from home. Which is why I minimized the issue.

I’m sure this debate will continue. :)

And, we continue to get email about Supervalu’s travails...

One MNB user wrote:

Like many of your viewers writing in about Supervalu about the recent layoffs, I have also been with the company for almost 10 years, however, unlike many of the submissions, I was not one of the many effected by them. In any large company, especially one that has seen continued declines in sales and performance, tough decisions like this one must be made. However, I believe while we did make one tough decision, there have been many other smart, tactical, and strategic ones being made. The tools, programs, and things that the company has in the work I believe have the capabilities to not only turn the company around, but will allow it to be at the front of the market. Everything has been coming together, and there is light at the end of the tunnel.

It’s funny how once someone is outside of a company, they have no problem looking back and describing how many issues it has, but when they were inside of it they didn’t seem to be able to do the work to fix it either. While the recent layoffs effected many long time employees, families, and friends, the company did, in my opinion, a good job of ensuring the top talent was retained and capable of taking over the tasks left by those departing.

Many people are also stuck on the idea that our CEO is "caught in the weeds," whereas I believe he is instead both in the weeds but in the air. Craig understands the big picture, but is also relaying the message that the details matter- they have to matter- because the company is at the point where if we don't get it all right, every little thing, we are in bigger trouble than ever.

But another MNB user wrote:

It's amazing how much money Supevalu has to take numerous management people on expensive seven day cruises, pay big bonuses, fly all the store directors to Minnesota and worry about customer service when they are totally pricing themselves out of most markets. It's obvious they have their priorities wrong!

And, from yet another reader:

I’m a long time reader (back to the Idea Beat days), and this is the first time I’ve felt compelled send in comments for Your Views.

I was a long term (over 25 year) employee with Supervalu, and left in the last year. There was a time when Supervalu was a growing company with long term, loyal employees who worked hard and together. Employees knew that when you put in extra effort to accomplish the company goals, the reward would come.

This was before the acquisition of Albertsons. I know others have written about the sentiment from long term Supervalu employees wondering which company acquired the other. While every company can improve, there were many Supervalu practices and programs that were successful, received industry-wide recognition, and made them a company profitable enough to (unfortunately) make the acquisition. Within the marketing and merchandising areas it appeared that anything attributed to Supervalu was determined to be outdated and ineffective (without actual review), regardless of the evidence to the contrary. What was called “taking the best of both companies” turned into using Supervalu profitability to fund Albertsons merchandising plans that had already failed there prior to the acquisition. Some of the previously successful Supervalu programs are the ones being resurrected (and updated) since Supervalu legacy employees took over responsibility for merchandising last year. There is a strong fear that it is too little, and way too late. The core of what made Supervalu great is still there if it can be unearthed, supported, and allowed 15 minutes to take root and flourish.

The company moved so far away from the basic blocking and tackling of retail and being merchants that it became unrecognizable – to employees and customers. And to my personal disappointment, the company moved away from the core values that made it a successful company with long term, committed employees.

Supervalu has now managed to turn themselves into the company they acquired. I sincerely hope for the good employees who remain that things can turn around. I no longer have confidence that it can happen while on the current trajectory. After 17 straight quarters of poor results, and with Captain ADHD discussing the fabric color of the deck chairs (via Yammer) versus being at the helm, something drastic and systemic needs to happen.

From The MNB Sports Desk

Baseball’s spring training has begun...

As A. Bartlett Giamatti once wrote, “It breaks your heart. It is designed to break your heart. The game begins in the spring, when everything else begins again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains come, it stops and leaves you to face the fall alone."

Corporate Drumbeat

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Industry Drumbeat

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